Focus on: Consumer-Centricity

February 10, 2011 | By

Coming off their most successful holiday season since 2004, retailers met at the National Retail Federation’s 100th Annual Convention & EXPO in New York City, looking for new ideas to sustain customer relationships and spur repeat shopper visits. One idea industry experts are bullish on is leveraging data produced by emerging digital consumer touchpoints and using the information to bolster consumer-centric strategies.

While retailers are currently working harder than ever to use customer data to get closer to shoppers, they are challenged by their metamorphosis into multichannel organizations. Today’s “connected” shopper also poses a challenge with the new digital touchpoints available at consumers’ fingertips, providing more information than most associates can deliver at store-level.

“Consumers have the power to communicate in ways they never have before,” said Ira Kalish, global director, Deloitte Research, at the NRF super session, “Consumers 2010: What Lies Ahead for the Retail Industry.”

According to Kalish, this poses new challenges in that these newer communication methods trump traditional messages, and with so much information being shared, commoditization of merchandise and services can occur.

“It is up to retailers to learn to use the technology in a way that will enhance their brands,” Kalish said.

At the heart of this transformation — and in a theme heard again and again during the NRF show — is a stronger retail adoption of Web-based services and the personal communications channels that consumers continue to adopt. The other key is to use these technologies to simplify the consumer’s shopping experience. Between an oversaturated marketplace, channel blurring and the vast assortments that retailers tend to carry, it is no wonder that shoppers are overwhelmed.

“Living in such a complex world, shoppers are looking for simplicity,” Kalish said. “Think back to the successes of retailers between the 1920s and 1930s, and it stemmed from simplicity. The industry has enough customer data that we can take care of our customers, and do it even better.”

Other speakers at the session emphasized that by understanding customers and their past shopping visits and habits, chains can help shoppers make their choices.

“To do this you need a 360-degree view of the customer, and this is where consumer-centricity plays a role,” said Peter Sachse, CMO, Macy’s, and chairman and CEO, Macys.com (see related story, page 26).

Sachse detailed the “My Macy’s” customer-centric localization initiative, whereby it created eight store regions and 49 new districts (for a total of 69 districts). Under the My Macy’s program, the company tailors merchandise to local customer needs and preferences.

Supermarket operator Food Lion is taking a lesson from Macy’s and embarking on its own consumer-centric program. The company, which is owned by Brussels-based Delhaize Group, > considers itself a global organization due to the insight it garners from its sister chains worldwide.

“However, all globalization still needs to be locally relevant,” said Cathy Green, president, Food Lion Family, which operates more than 1,300 supermarkets under several banners. “We take learnings garnered from operations in Greece and try those concepts on domestic soil. We truly believe diversity drives innovation. However, we are mindful to bring this innovation to a local level in a way that is relevant to our shoppers.”

As the consumer becomes an omni-channel shopper, however, retailers need to adopt new technologies to sustain consumer-centric strategies and meet their shoppers’ needs.

“The omni-channel configuration allows us to talk to our shoppers on a 24/7 basis, but she is letting us know her needs have not changed,” Green said. “She still wants merchandise when, where and how she wants it. By leveraging the millions of bytes of shopper data we collect, we have actionable insights to provide the best shopping experience based on her preferences.”

Food Lion is going one step further and using this data and digital technology to bring that simplicity back to the shopping experience. Food Lion delves into its MVP loyalty card database to create incentives that are delivered via e-mail, and even via SMS text message to mobile and smart phones.

“Many of our shoppers are busy moms. We can analyze our shopper data to understand her habits, get to know her and learn what she puts on her shopping list,” Green reported. “By delivering tailored incentives and assortments, and even offer service, like guiding her through our store with an electronic aisle companion, we are simplifying the shopping experience and letting her know we consider her relationship with Food Lion valuable.”

The mobile channel can help retailers support customer-centric strategies. The speakers agreed that while mobile will become an increasingly driving force in retail, delivery configurations will continue to evolve.

“The mobile world is constantly developing, and while smart phones fit in a pocket today, tablet computers are now emerging and supporting mobile apps as well,” said Macy’s Sachse. “Most importantly, mobility has to make her powerful on her terms.”

Social networks can also be tapped to enhance retailers’ consumer-centric strategies.

“We are actively engaged,” Sachse said. “Consumers want two-way dialogue. For years, we spit stuff to them, and they want to spit it back. We are embracing it by offering promotions that can only be viewed through social networks. It is another avenue we are trying to master.”

Regardless of the channel, panelists believe the way to build their brands is to have consumers on their side. More importantly, they need to respond to their input.

“Chains need people to build their brand and invest in markets, and the only way to do that is align with customers and listen to them,” Kalish said.

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